types of companies in foreign-trade zones
From FTZ, Page 7
1 Duty/tariff deferral: Foreign-Trade Zones provide importers, exporters, manufacturers, and distributors with opportunities to reduce U.S. Customs duties and tariffs and defer payment until products leave the zone. 2 Duty/tariff elimination: If an imported product that has been admitted to a Foreign-Trade Zone is subsequently exported, no U.S. Customs duty or tariff is due. 3 Duty/tariff reduction: Businesses can reduce duties and tariffs by paying the duty/tariff on manufacturing parts or the finished product, whichever is lower. 4 Weekly entry program: By using the Foreign- Trade Zone, businesses can file weekly TOP 10 advantages for businesses in a foreign-trade zone
or entry in the Customs territory of the United States. This helps reduce inaccurate inventory and emergency shipments. 8 Quality assurance and customs compliance: With the high quality of inventory control systems required, better quality control is a side benefit. These benefits include location and tracing of all foreign merchandise, including those returned or destroyed under Customs supervision. This reporting helps assure that only duty or associated fees are paid. 9 Cargo insurance: Some Foreign-Trade Zone operators and end users have been successful in negotiating a reduction in cargo insurance rates by arguing that direct shipment avoids pilferage opportunities at the point of Customs entry. 10 Community benefits: Foreign-Trade Zones benefit American communities by attracting new businesses, boosting local employment, expanding the tax base, and improving infrastructure.
entry for multiple shipments and only pay one merchandise processing fee for huge savings. 5 Protecting cash flow: A Foreign-Trade Zone offers benefits such as increased cash flow and reduced actual duty paid on imports and products warehoused, manipulated, or manufactured for export. 6 Streamlined logistics and direct delivery: Upon approval from Customs, imports may be directly delivered to the Foreign-Trade Zone. Users may also request permission to break and affix Customs seals. Also, there is no need to hold products for Customs clearance. This often results in a one-to three-day reduction in the supply chain which benefits not only manufacturers and other end users, but third party logistics providers. 7 Inventory control: Better inventory control and security may lead to better compliance with U.S. Customs and Border protection requirements. The Foreign-Trade Zone program requires accurate reporting to follow foreign merchandise from receipt, processing, and shipment for export
their own. As a Foreign-Trade Zone, City of Industry is strategically located about 40 miles from Los Angeles International Airport, 28 miles from Ontario International Airport, and 45 miles from the ports of Los Angeles and Long Beach. City of Industry an ideal place to do business under a Foreign-Trade Zone. Businesses already located in City of Industry or that are new to City of Industry can apply for a Foreign- Trade Zone designation. It’s quick under a streamlined process. For more information on City of Industry’s Foreign-Trade Zone program, email Scott Neal at scottneal61@gmail.com or call him at 714-644-0800.
Large and small companies alike use Foreign-Trade Zones; 70 percent of Foreign-Trade Zone users are small businesses. Such companies include importers, manufacturers, distributors, assemblers of products, and exporters of imported merchandise and/or products containing imported merchandise. The types of companies that use Foreign-Trade Zones include: Warehousing and Distribution Motor Vehicle Assembly General Manufacturing Pharmaceuticals Machinery/ Equipment Oil Refinery/ Petrochemical Electronics Food Processing
Sources: City of Industry and the National Association of Foreign-Trade Zones.
FIVE WAYS THE U.S. FTZ PROGRAM HELPS BUILD A STRONGER U.S. ECONOMY
Created by Congress in 1934 to encourage investment and promote U.S.-based manufacturing and distribution, exports and American jobs, Foreign-Trade Zones (FTZs) are designated areas physically in the United States, but considered to be outside U.S. Customs territory, where goods can be stored, assembled, manipulated, modified, relabeled, repackaged and re-exported, free of U. S. Custom duties. FTZs are in every state and Puerto Rico.
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CREATING AMERICAN JOBS 550,000 U.S. WORKERS IN A FOREIGN-TRADE ZONE EMPLOYING MORE THAN
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INVESTING IN AMERICAN COMMUNITIES ADDS BILLIONS OF INVESTMENT DOLLARS INTO LOCAL ECONOMIES
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E stablished in 1989, Harmoni International is an importer of garlic and other spices including ginger, paprika and black garlic. The company is headquartered and maintains two large warehouses in City of Industry. About a year ago, Harmoni learned that the company could join the Foreign-Trade Zone in City of Industry and started the application, which was approved. “It was easy for us in the city,” said Harmoni General Manager Jesse Deng. Harmoni’s customers include factories,
Foreign-Trade Zone and that the business community using these zones will grow more influential as a group with regard to influencing government policies surrounding imports and exports. “It’s a good thing,” Deng said of the Foreign-Trade Zone. “I would like this group to be bigger. Maybe that could help with some of the regulation part. The (Trump) administration would hear our voice. I hope our voice would be louder.”
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FTZs benefit U.S. communities by attracting new businesses, increasing local employment, expanding the tax base, and enhancing infrastructure. Example: Through it’s FTZ production facility, BMW Manufacturing Co., Spartanburg SC (FTZ #38) turned a struggling textile town into an automotive manufacturing and exporting powerhouse.
INCREASING THE COMPETITIVENESS OF U.S. BASED COMPANIES
Example: Airbus Americas, Inc. Mobile AL (FTZ #82) aircraft manufacturing operations have grown since 2015 to support more than 15,000 Alabama jobs.
By providing mechanisms to optimize supply chains and minimize a product’s landed cost, FTZs improve U.S.- based companies’ cost competitiveness, allowing them to offer more affordable and innovative products. Example: FTZ duty savings on its inputs allows FTZ duty savings on its inputs allows Piramal Critical Care, Inc., Bethlehem PA (FTZ #272) a U.S. based anesthesia products manufacturer, to compete with duty- free foreign products in U.S. and global markets
restaurants, retail outlets, and supermarkets. Deng said Harmoni customers have benefitted by being able to defer duties, because their products are stored in the designated Foreign- Trade Zone Harmoni warehouse in the City of Industry before being delivered. Some customers are storing their imported products in Harmoni’s warehouse to wait and see if tariffs will decrease, Deng said. This has helped them save money and improved their cash flow, she said. “They can be more flexible. It’s helping to attract new customers,” Deng said. She hopes other companies will join the
PROMOTING U.S. EXPORTS
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STRENGTHENING COMPLIANCE
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HELPS U.S. BASED COMPANIES BE MORE COMPETITIVE IN THE GLOBAL MARKETPLACE Example 1: Thanks to the FTZ program’s cost savings and competitive benefits, Kubota North American Corporation, Atlanta, GA (FTZ #26) now exports 35% of its American-made sub- compact tractors, utility vehicles, and lawn mowers to Europe and Australia. Example 2: The cost-competitive advantage from the FTZ program allows Kawasaki Motors Mfg. Corp. U.S.A., Lincoln, NE (FTZ #59) to export 20% of its U.S. production of JetSkis and Mule and Teryx lightweight utility and sport vehicle to the EU, Australia, Canada, and Japan. ADVERTISING SUPPLEMENT TO THE L.A. TIMES
To operate in an FTZ, companies must adhere to strict security requirements, comply with stringent U.S. Customs and Border Protection (CBP) rules, and strictly observe a variety of U.S. laws and regulations. They have close and transparent working relationships with CBP officials, who consider FTZs a model of compliance and a “CTPAT security best practice.”
SOURCES: 85th ANNUAL FOREIGN-TRADE ZONES BOARD REPORT TO THE U.S. CONGRESS; U.S. BUREAU OF ECONOMIC ANALYSIS 2022 EXPORT DATA; 2020 FTZ ECONOMIC IMPACT STUDY, NAFTZ; U.S. INTERNATIONAL TRADE COMMISSION DATAWEB
Published by NAFTZ March 2025
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